Babcock & Wilcox Enterprises, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the Babcock and Wilcox Enterprises Q4 and Full Year 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Megan Wilcox, Vice President of Investor Relations at Babcock & Wilcox. Thank you. You may begin.

Megan Wilson Thank you, April, and good morning, everyone. Welcome to Babcox & Wilcox Enterprises' fourth quarter and full year 2020 earnings conference call. I'm Megan Wilson, Vice President of Investor Relations at B&W. Joining me this morning are Kenny Young, B&W's Chairman and Chief Executive Officer, and Lou Salamone, Chief Financial Officer, to discuss our fourth quarter and full year results. During this call, certain statements we make will be forward-looking. These statements are subject to risks and uncertainties, including those set forth in our safe harbor provision for forward-looking statements that can be found at the end of our earnings press release and in our annual report on Form 10-K that is on file with the SEC and provide further detail about the risks related to our business. Additionally, except as required by law, we undertake no obligation to update any forward-looking statements. We also provide non-GAAP information regarding certain of our historical results to supplement the results provided in accordance with GAAP. This information should not be considered superior to or as a substitute for the comparable GAAP measures. A reconciliation of historical non-GAAP measures can be found in our fourth quarter and full year earnings release published this morning and in our company overview presentation filed on Form 8K this morning and posted on the investor relations section of our website at babcock.com. With that, I will turn the call over to Kenny.

Thanks, Megan. Good morning, everyone, and thanks for joining our call. Our results for the fourth quarter and full year 2020 really reflect the ongoing positive impact of our strategic plan, despite the adverse effects of COVID across all of our segments. Our strategic actions in 2020, including the rebranding of our segments, ongoing international expansion, and continued focus on cost-saving initiatives, provide a strong foundation for growth as we pursue our robust global pipeline. As Lou will discuss in more detail with the recent closing of our common stock and senior note offerings, we have dramatically improved our capital structure. As a result of the offerings, we have reduced our secure debt by $274 million and our future cash interest payments by approximately $16 million annually. Combined with the reduction in our required pension contributions, we expect to save more than $40 million annually in cash expenses on a pro forma basis. Based on 2020 adjusted EBITDA and net debt as of December 31, 2020, the offerings resulted in a net leverage ratio reduction from 6.4 down to 3.6 times pro forma for the effects of our offerings and related debt pay downs and certain fees. The proceeds from our offerings not only significantly reduce our cash expenses, but also provide capital to support the expansion of our clean energy technology portfolio as we continue to execute our growth strategy. While COVID caused delays and deferrals on several of our projects in 2020, we continued implementing our strategic growth initiatives and global expansion. We're gaining momentum with our new branding, continuing to expand our sales and service presence internationally, especially in Europe, Asia and the Middle East, and pursuing more than $5 billion of identified project opportunities in our pipeline through 2023. At the same time, we continue focusing on cost reductions, project execution, clean energy and carbon-free environmental technology research and development, and bottom line profitability notably we booked roughly 645 million of new work in 2020 including 167 million of bookings in the fourth quarter and end of the year with about 535 million in backlog as of december 31st 2020 which is a 21.3 percent increase compared to the end of 2019 And keep in mind, our pipeline and backlog do not include shorter lead time parts and services, which in 2020 represented 56% of our revenues. Looking forward, we continue to target 70 to 80 million of adjusted EBITDA in 2021 and 95 to 105 million in 2022 based on our current visibility, taking into account the seasonal impacts of cold weather and customers' reduced maintenance outages. on first quarter performance, which is typically historical performance for us. Our normal cyclical performance increase from Q1 to Q4 each year. Our global expansion to support the increasing demand for renewable and environmental technologies through both innovation and acquisition is progressing as planned. We see significant opportunities to grow our business profitably, benefiting from our improved project execution and operational efficiency and focusing on bottom-line results and strong cash management. Our strategic actions in 2020, combined with our recent comprehensive refinancing, have positioned us well to achieve our targets and continue to create shareholder value. So how did we get there? Well, as we announced last year, we have aligned our market-facing segments and financial reporting under three new segments. We're now focused on leveraging our three brands, B&W Renewable, B&W Environmental, and B&W Thermal around the world. Across these three brands, we are a technology innovator providing a comprehensive suite of waste energy and biomass systems, emission controls, ash handling systems, cooling systems, steam generation technologies and auxiliary equipment, as well as our ever-expanding aftermarket parts and services to optimize and upgrade existing equipment and operate and maintain plants. These segments directly reflect our core markets, technologies, and strategic pursuits and align with our customer needs by providing technology solutions to help them achieve a clean, sustainable energy and industrial infrastructure. Our technologies and our branding are aligned with the major trends driving our industry today. That includes the demand for power and critical infrastructure as it continues to grow globally. And hand-in-hand with this growth is a drive towards more renewable energy sources like waste energy and biomass. There are increasing environmental regulations globally, including restrictions on landfilling, more stringent emission standards, and water use regulation. And the fossil fuel install base is aging, driving the need for more aftermarket services and upgrades. And the potential for carbon legislation and regulation is growing. Our technologies help our customers meet these needs and requirements, and we are continuing our innovation to further develop technologies to support production of biofuels or syngas, hydrogen combustion, and other emerging markets. We also believe that global climate change efforts will include significant steps forward in the application of carbon capture technology. And as a power generation leader, B&W anticipated this need and has been working with universities, government agencies, and our own technical experts to develop carbon capture technology for several years. We have proven the efficacy of multiple carbon capture technologies through pilot and field testing, and they are now ready for commercial demonstration. So as we think about our growth strategy, we are focused on meeting the global need for renewable solutions and environmental technologies, reducing methane from waste, which carries significant environmental impacts, supporting our large install base and leveraging increasing opportunities to provide parts and services on our competitors' equipment, focusing on cash flow and profitability across the board and expanding our sales, service, and business development presence around the world to serve high-growth markets and the global energy transformation. As a part of this, we recently announced new regional managers for Europe, the Middle East, Africa, and Asia Pacific region, and we're opening regional headquarters in Dubai and Australia, while our European headquarters are in the U.K., And we're hiring sales and service team members around the world, more than doubling our presence outside the Americas. We have already realized success in each region through incremental parts and service sales, while positioning for larger upgrades and renewable environmental and thermal opportunities. This expansion is aligned with the roughly $27 billion in addressable market we see globally over the next three years. Today, we're poised to deploy our cutting-edge technologies globally to help address critical climate and environmental needs. I'll now turn the call over to Lou to discuss the key points of our financial performance for the fourth quarter 2020, as well as our full-year results. Lou?